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Uncovering Probate Fraud

Peter Jeffreys sets out some of the issues surrounding an unwelcome problem that is attracting increasing publicity. Let the professional executor and adviser beware ….(taken from Isssue No 13 – October 2000)

The aggregate value of all the financial arrangements which are in the care of the Association`s members is well in excess of £1 trillion.

‘There is something about Wills which brings out the worst side of human nature. People who under ordinary circumstances are perfectly upright and amiable, go as curly as corkscrews and foam at the mouth whenever they hear the words `I devise and bequeath` ‘(Dorothy L Sayers, `Strong Poison`).

This article is concerned with what is commonly called `Probate Fraud`. The term is not ideal, in that this type of fraud might happen either after the deceased has died or shortly before. The common strand, however, is that fraud of this nature is primarily to the detriment of the deceased’s beneficiaries rather than the deceased himself or herself.

Is probate fraud a problem about which you need to concern yourself? I would answer yes. As an example, the legacy department of one national charity (the RNIB) has experienced three cases of probate fraud in the past two years, with a total value of more than £200,000. It is accepted that charities are particularly susceptible to probate fraud, because the fact that they are beneficiaries at all often means that there are no close family members; but it would be naive to assume that the problem only affects charities. One commentator has estimated that beneficiaries could be losing up to £40 million a year through probate fraud. Next time (to borrow the National Lottery slogan), it could be you.

Identifying Fraud
Unsatisfactory though it may seem, one of the best ways to recognise fraud is to follow your instincts. It is assumed that readers of this journal will have extensive experience of estate and trust administration, and this should bring with it the ability to recognise irregularities and to know when all is not as it should be. To give a few examples (all of them genuine, regrettably):-

[a] A set of estate accounts included some quite substantial credit card bills. The deceased was in her eighties when she died. Enquiries revealed that the deceased did not in fact have any credit cards, and that these fictional liabilities were created by the executor.

[b] The tax deduction certificate for a particular bank account revealed an extremely large interest figure for the financial year prior to death, while the account had only a modest balance by the date of death. Enquiries revealed that the deceased’s nephew had made a substantial gift to himself from the account, while his uncle was ill in hospital.

[c] A set of estate accounts included a liability to a car hire purchase company. Again, the deceased was elderly by the time of death. Enquiries revealed that a car had been bought in the deceased’s name for the benefit of a third party at a time when the deceased was suffering from advanced Alzheimer’s disease.

[d] A tax voucher revealed that its dividend had been paid into a particular bank account, but the existence of that account had not been disclosed to the executors. Subsequent inspection of the deceased’s bank statements for the few months prior to death revealed substantial withdrawals, with some large cheques only being cashed a couple of days after the date of death. Enquiries revealed that the cheques had been forged by the deceased’s carers, and that some of the cheques were incorrectly dated to disguise the fact that the deceased had already died by the time they were written.

No special skills are needed to identify something odd about each one of these situations. Anyone with professional experience in the field of estate and trust administration, and a basic knowledge of human nature, could and should realise that something was amiss.

Overt Enquiries
Extreme care is necessary when pursuing enquiries into a particular course of activity which may or may not have been fraudulent. It is important to avoid arousing suspicion, to avoid alerting the suspect to your concerns, and indeed to avoid falling foul of libel laws. However, where wills are concerned, Law Society guidelines confirm that a solicitor who has drafted a will which comes under enquiry after the death of the testator, should offer all assistance and co-operation to a disgruntled third party who is making reasonable enquiries. This guidance was confirmed by the Court of Appeal in the case of Larke -v- Nugus (1979)*. It is now customary to refer to the initial letter of enquiry in such cases as a `Larke -v- Nugus letter`. Possible issues to raise in that letter are as follows:-

Obtain copies of all previous wills

Obtain copies of the will file correspondence and attendance notes

Was the will explained fully to the deceased?

Where was the will executed?

Who witnessed it (full names and addresses), and can statements be taken from them?

Obtain copy of the will of the deceased’s late husband/wife (if applicable)

Ask for details of the deceased’s doctor/hospital/residential care home, and for permission to obtain medical records from them

The evidence so obtained then needs to be carefully assessed. Statements may be sought from any relevant witnesses.

It is always important to analyse the evidence one obtains, and to think about it carefully, rather than merely reading it through and accepting it without question. I was involved in an extraordinary case recently where attendance notes were made available to me from the legal clerk who had prepared the disputed will. It was clear from the attendance notes that the legal clerk had seen the deceased on her own; the deceased had been in full possession of her mental faculties and indeed was a determined and forceful lady. There was no question of undue influence; and the will obviously reflected accurately the instructions given by the deceased. This was all very well, but I still did not feel that the evidence had the ring of truth. As it happened, I was right, and the person who had given instructions for the will and later signed it was not in fact the deceased at all, but the deceased’s carer’s mother, taking part in a particularly disagreeable forgery. The fraud subsequently came to trial as R -v- Spillman, Spillman & Russill (1999).

Covert Enquiries
I have dealt so far with what may be described as relatively routine enquiries, which are often made in cases where there is no suggestion of fraud at all. Once your suspicions have been aroused, however, it is often appropriate to make rather more discreet enquiries. Possibilities include:-

Were the deceased’s affairs being managed before death by virtue of an Enduring Power of Attorney or a Court of Protection Receivership? Receiverships give little opportunity for fraud. The same is not true of EPAs, and the Master of the Court of Protection estimated recently that as many as 10% to 15% of EPAs may give rise to fraud in one form or another.

Was the deceased in a residential home prior to death, and are the proprietors or staff of the home implicated in the alleged fraud in any way? It may be worth contacting the Inspections and Registrations Unit within the local council Social Services Department. Policies vary from one local authority to another, as to whether they will be prepared to deal with such enquiries, but it is certainly an option to bear in mind.

Consider obtaining the deceased’s tax returns for, say, the two years prior to death. These should give a good indication of the deceased’s sources of income; and if any income-generating assets seem to have disappeared, further enquiries should be undertaken.

Similarly, consideration should be given to obtaining bank and building society statements for several months prior to death.

If trust or estate accounts have already been produced, scrutinise them carefully, looking for possible areas of suspicion.

If there are questions about the ownership of property, consider making a search at HM Land Registry (for example, to see if the deceased’s property was sold shortly before death to a relative or carer).

Consider handwriting. An initial reaction to handwriting may be misplaced: for example, increasing age or particular medical conditions can lead to an increasingly `shaky` signature, even though the testator may have full capacity. At the other extreme, the handwriting may be suspicious for the best possible reasons – in the Spillman case (referred to above), the signatures did not tally because the disputed will had been signed by someone else, pretending to be the deceased for fraudulent purposes. If in doubt, it is often worth instructing a handwriting expert to prepare a detailed report. As part of this process, consider obtaining cheques from the deceased’s bank, or other handwriting samples, so the expert has a good range of signatures for analysis and comparison.

Consider approaching relevant witnesses. The deceased’s neighbours, close friends or relatives may be helpful. This stage needs to be handled with care, and it should be remembered that some witnesses will have their own axe to grind. On the other hand, witnesses can be invaluable in confirming circumstantial details. In the Spillman case, the neighbours confirmed that the deceased had not been at her bungalow on the two key days when instructions were given for the will and the will was signed. However, since we already knew that the two meetings with the legal clerk had taken place at the deceased’s bungalow, this evidence was vital in helping us to work out how the fraud had been committed.

Assess the circumstantial and identification evidence. In Spillman, quite apart from the evidence of the neighbours, the medical records revealed that the district nurse had actually visited the deceased at a different address some ten miles away, on the day when she was supposed to be making her will at her own bungalow. Various friends also confirmed that the deceased was a large, even overweight, lady; while the person who gave instructions for, and signed, the will was described as being small and of slight build.

Finally, look at the death certificate. If you are already suspicious about the conduct of the deceased’s carer, your suspicions may be enhanced if you see that the death was registered by the carer, with the qualification for registering the death stated on the certificate as being `present at the death`. It is worth bearing in mind at this point that only one medical certification is needed if the deceased is going to be buried, while two medical certifications are required for cremation.

Words of Caution
The central assumption behind this article is that probate fraud is widespread. That does not mean, however, that fraud is present in every case you will deal with. Sometimes, there are rational explanations for the oddest items of accounting. Sometimes too, unexpected changes to a will can be genuinely accounted for by nothing more dramatic than the general cussedness of human nature.

It is wise to avoid pursuing such thorough enquiries that the cost of the enquiries outweighs the likely benefit to be obtained. The usual cost-benefit principle applies. If your initial enquiries lead you to believe that there really is something rather irregular, then it may be appropriate to seek the agreement of your beneficiaries before you incur additional expense.

Conclusion
It is not the purpose of this article to turn trust practitioners into private investigators; there are plenty of private investigators out there already, and it will sometimes be beneficial to instruct them when faced with suspicious circumstances. Similarly, readers may end up referring cases to the Fraud Intelligence Unit or the Red Alert line at the Office for the Supervision of Solicitors, or applying to the High Court or the Court of Protection, or indeed referring a case to the police. There is no intention to detract from so doing. The point is simply this, that those of us involved in trust and estate administration are often at the front line. If we are not vigilant to spot shady or downright dishonest transactions, then they will often go undetected; and that, it is submitted, is to the detriment of society as a whole.